We can't say this is a surprise... but it is sweet to see. The iPhone Dev Team has added a video to their blog showing off the latest version of their upcoming PwnageTool 2.0, along with a video of what they claim is the "world's first" jailbroken iPhone 3G. Check the video after the break, and hit the read link to see how their progress is coming on the new case-cracker.

What you are seeing is the world’s first jailbroken iPhone 3G running our own software. I think you’ll agree that this was worth the wait.

This isn’t a release announcement, but all I can say is that we are working very hard ;-)

The question I now have is can the jailbroken phone still purchase Apple App Store applications, and if not, will those developers move to developing for the jailbroken phone as opposed to for the Apple Store. This has already happened shareware style for the original iPhone.

This may not come down to a question for developers, as there may be a large number of people jailbreaking their iPhones, and if Apple blocks these people from using the Apple Apps Store, developing for jailbroken machines could become more mainstream. This also raises ethical questions... for example, will Apple continue to allow someone who has programmed a jailbroken application to develop for the Apple App Store?

The answers should be revealed all in good time, but personally I just can't wait to get my new iPhone... I might brave the crowds today.